* Drug firm Perrigo to buy Elan; Publicis, Omnicom in merger
* Pending-home sales data due at 10 a.m.
* Futures off: Dow 27 pts, S&P 3.6 pts, Nasdaq 6 pts
By Rodrigo Campos
NEW YORK, July 29 U.S. stocks were set to slip
at the open on Monday as a week packed with data and central
bank meetings gets under way, with the S&P 500 just 0.2 percent
below its record close set a week ago.
Investors will focus on Wednesday's statement from the U.S.
Federal Reserve for clarity on when the Fed will begin to pare
its $85 billion in monthly bond purchases. The Fed is most
likely to begin tapering its quantitative easing stimulus in
September, according to a Reuters poll of economists conducted
on July 22.
Until recently investors have embraced average or weak data
with the expectation that the Fed will continue to stimulate the
economy and put a floor on stock prices. However, the prospect
of a slightly less accommodative Fed in the near future has
increased the market's need for stronger economic data.
Data on the housing and industrial sectors are scheduled in
the first half of the week, followed by gross domestic product
for the second quarter on Wednesday and the key payrolls report
on Friday. The National Association of Realtors issues pending
home sales for June at 10 a.m. (1400 GMT) on Monday.
On the earnings front, hotel, energy and financial services
conglomerate Loews Corp posted a jump in second-quarter
profit as revenue from its insurance arm, CNA Financial,
increased nearly 13 percent. Loews shares added 2 percent in
light premarket trading.
"Earnings have been good so far, but they have come in
low-quality," said Kim Forrest, senior equity research analyst
at Fort Pitt Capital Group in Pittsburgh. "We haven't really
seen margin expansion or a lot of revenue growth and that can
keep a lid on the markets in the short term."
Halfway through earnings season, 67.6 percent of S&P 500
companies have beaten analysts' expectations - in line with the
67 percent average beat in the last four quarters. About 56
percent of the companies have beaten revenue expectations, more
than the 48 percent of revenue beats in the past four earnings
seasons but below the historical average.
Wynn Resorts shares fell 1 percent in premarket
trading after the casino developer and operator missed Wall
S&P 500 futures fell 3.6 points and were below fair
value, a formula that evaluates pricing by taking into account
interest rates, dividends and time to expiration on the
contract. Dow Jones industrial average futures fell 27
points, and Nasdaq 100 futures lost 6 points.
Merger activity could give equities support as big deals
show that large investors see value in the market.
On Monday, U.S. drugmaker Perrigo agreed to buy
Irish drug company Elan for $8.6 billion. U.S.-traded
Elan shares jumped 7.1 percent to $15.99 in premarket
Shares in advertising groups jumped after Publicis
and Omnicom said they would merge, as investors bet the
deal would create an opening for rivals to poach defecting
clients and potentially trigger more deals.
The merger also could bring rival accounts such as Coca-Cola
and PepsiCo under one firm. Omnicon shares
gained 7 percent in premarket trading.
"Deals are getting done because there's still cheap money,"
said Fort Pitt's Forrest. "It makes you wonder if the threat of
higher interest rates is making these deals get done now."
Hudson's Bay Co, operator of department store
chains Lord & Taylor in the United States and The Bay in Canada,
said it would buy luxury retailer Saks Inc for $16 per
share. Saks shares rose 3.5 percent to $15.85 in premarket